Random monitoring in financing relationships

This paper examines a financier's optimal monitoring intensity in a multi-period financing relationship.We identify conditions under which the financier should sometimes misidentify the quality of an entrepreneur. Such an imperfect evaluation technology affects action choices by bad entrepreneurs. We first characterize the optimal monitoring intensity and show that it is one in which the investor monitors entrepreneurs randomly. Random monitoring in the first stage of a relationship induces bad entrepreneurs to reveal their intrinsic types. Second, because random monitoring reduces the share of bad entrepreneurs in the subsequent periods, we show that the financier can therefore realize substantial gains.Incentives; Monitoring; Screening

Multiple Large Shareholders and Earnings Informativeness

Purpose - The purpose of this paper is to add to our understanding of the monitoring role of multiple large shareholders by examining their impact on the informativeness of firms' earnings. Design/methodology/approach - We use regression models that relate earnings to stock returns for a sample of 402 French publicly traded firms covered during 2003-2007. Findings - We show that earnings informativeness is significantly positively related to the owner's ultimate cash flow rights. Consistent with the alignment effect, stock ownership aligns management and shareholders interests which reduces managers' incentives to manipulate accounting information. We also find that earnings informativeness is significantly negatively related to the excess control of the ultimate controlling shareholder. This result supports the entrenchment effect and suggests that controlling shareholders have greater incentives to obscure accounting figures when expropriation is likely. Finally, control contestability of the largest controlling shareholder mitigates information asymmetry problems thereby enhancing earnings informativeness. Limitations/implications - Our findings stress the importance of MLS in enhancing internal monitoring and mitigating agency costs. Because France is characterized by a weak legal system, highly concentrated ownership structures and excess control, our results provide valuable insights to mitigate extreme agency problems. Originality/value - The paper adds to the literature on corporate governance and the quality of accounting information by investigating strategic interactions between various blockholders and their impact on earnings informativeness. The study complements prior studies on the monitoring role of MLS by demonstrating that both their presence and control size translate into significantly greater earnings informativeness.Earnings, Earnings informativeness, Excess control, France, Multiple large shareholders, Stock returns

Incentives for Accuracy in Analyst Research

This paper proposes a model to analyze the dynamic relations between incentive contracts and analysts' effort in providing accurate research when both ethical and reputational concerns matter. First, we show that reputation picks up ability and thus serves as a sorting device: when analysts have a relatively low reputation for providing research quality (below a threshold level) banks find it more profitable to offer a mix of monetary and non monetary (ethic based) incentives and rely on the analyst's work ethic in ordre to provide research quality. Alternatively, when analysts have a high reputation, full financial (performance based) incentives contracts offer a substantial reward for their contribution to the firm's profits. Second, we find that the design of compensation contracts, in the presence of reputational concerns and work ethic, may lead to incentive problems: full financial incentives contracts may exacerbate conflicts of interest by giving analysts extrinsic rewards on reporting, thereby inducing them to prefer high short term benefits to the detriment of long term research and coverage effort. On the contrary, a mix of monetary and non monetary rewards based on the analyst's work ethic may allow them to resist pressures from conflicts of interest and induces a high research effort thus enhancing long-run reputation.Motivation, Reputation, Reporting, Investment analysts.

Entrepreneurship turnover and endogenous returns to ability

This paper proposes a model of entrepreneurial turnover highlighting a non-monotone relationship between technological change and ability-biased sorting into entrepreneurial types. Entrepreneurial decisions are examined in a two-stage model under uncertainty in which entrepreneurs decide to abandon a project and start a new venture depending on technological change and on ability. We show that technological change affects the quality distribution of entrepreneurship by increasing the ex-ante number of entrepreneurs undertaking the most efficient projects and decreasing the post-entry number of entrepreneurs of low-quality firms who choose to continue their initial business. A higher rate of technological change is therefore likely to induce a cleansing effect on entrepreneurial activity and to alter the market perception of business creation.Entrepreneur entry and exit; Technological change; Selection; Stigma

Random monitoring in financing relationships

International audienceThis paper examines a financier's optimal monitoring intensity in a multi-period financing relationship.We identify conditions under which the financier should sometimes misidentify the quality of an entrepreneur. Such an imperfect evaluation technology affects action choices by bad entrepreneurs. We first characterize the optimal monitoring intensity and show that it is one in which the investor monitors entrepreneurs randomly. Random monitoring in the first stage of a relationship induces bad entrepreneurs to reveal their intrinsic types. Second, because random monitoring reduces the share of bad entrepreneurs in the subsequent periods, we show that the financier can therefore realize substantial gains

Incentives for Accuracy in Analyst Research

This paper proposes a model to analyze the dynamic relations between incentive contracts and analysts' effort in providing accurate research when both ethical and reputational concerns matter. First, we show that reputation picks up ability and thus serves as a sorting device: when analysts have a relatively low reputation for providing research quality (below a threshold level) banks find it more profitable to offer a mix of monetary and non monetary (ethic based) incentives and rely on the analyst's work ethic in ordre to provide research quality. Alternatively, when analysts have a high reputation, full financial (performance based) incentives contracts offer a substantial reward for their contribution to the firm's profits. Second, we find that the design of compensation contracts, in the presence of reputational concerns and work ethic, may lead to incentive problems: full financial incentives contracts may exacerbate conflicts of interest by giving analysts extrinsic rewards on reporting, thereby inducing them to prefer high short term benefits to the detriment of long term research and coverage effort. On the contrary, a mix of monetary and non monetary rewards based on the analyst's work ethic may allow them to resist pressures from conflicts of interest and induces a high research effort thus enhancing long-run reputation

FACTORS AFFECTING PREGNANCY OUTCOME IN REFUGEE MOTHERS IN LEBANON

In recent years, Lebanon has been a destination for less privileged refugees who seek better living conditions and shelter from regional wars, conflicts and instabilities. Recently, it is estimated that more than 20% of residents in Lebanon are Syrian refugees who live under questionable conditions regarding quality of life. Pregnant women, among their population, are considered more vulnerable to the effect of such living conditions. This study aimed at assessment of pregnancy outcome (birth weight, infant complications…) in a sample of women in refugees areas who have recently given birth and relate this outcome to multiple factors including socioeconomic status of the family, psychological status of the mother, maternal vitamin supplementation, and previous high-risk pregnancies. This study was conducted by a field-based survey, using questionnaire. Sample taken was by convenient sampling of just delivered women, focusing on major areas in Lebanon with the highest population of refugees. Results of our study detected increased risk of having neonatal complications in women with previous high-risk pregnancies. There was statistically significant difference between Syrian and Lebanese women regarding birth outcome. Syrian women were had a higher percentage of complications and lower birth weight than Lebanese women. There were significantly more neonatal complications in families with low income, women with improper antenatal care, and those with a compromised psychosocial state during pregnancy. There was also a high percentage of refugees who did not know about supplementation during pregnancy. Conclusion: Less privileged women in refugee areas during pregnancy and after delivery are not receiving appropriate antenatal care. Poor living circumstances, low socioeconomic status, and compromised psychosocial status of Syrian mothers increase the risk of having neonatal complications and low birth weight of their newborn infants. It is recommended to encourage awareness programs for the Syrian refugees in Lebanon regarding pregnancy and neonatal health. It is advised to provide more strict antenatal care to women who had previous complications in delivery

Helping Babies Breathe in Sudan

A hospital-to-hospital partnership between Cork and Sudan aims to reduce neonatal deaths in Sudan by focusing on training village midwives in neonatal resuscitation techniques

Helping Babies Breathe in Sudan

A hospital-to-hospital partnership between Cork and Sudan aims to reduce neonatal deaths in Sudan by focusing on training village midwives in neonatal resuscitation techniques

ITGB1-dependent upregulation of Caveolin-1 switches TGF beta signalling from tumour-suppressive to oncogenic in prostate cancer

Caveolin-1 (CAV1) is over-expressed in prostate cancer (PCa) and is associated with adverse prognosis, but the molecular mechanisms linking CAV1 expression to disease progression are poorly understood. Extensive gene expression correlation analysis, quantitative multiplex imaging of clinical samples, and analysis of the CAV1-dependent transcriptome, supported that CAV1 re-programmes TGF beta signalling from tumour suppressive to oncogenic (i.e. induction of SLUG, PAI-1 and suppression of CDH1, DSP, CDKN1A). Supporting such a role, CAV1 knockdown led to growth arrest and inhibition of cell invasion in prostate cancer cell lines. Rationalized RNAi screening and high-content microscopy in search for CAV1 upstream regulators revealed integrin beta1 (ITGB1) and integrin associated proteins as CAV1 regulators. Our work suggests TGF beta signalling and beta1 integrins as potential therapeutic targets in PCa over-expressing CAV1, and contributes to better understand the paradoxical dual role of TGF beta in tumour biology.Peer reviewe